Macy's Cuts All Magazine Spending for First Half of '09

Surprising Move by Big-Budget Advertiser a Bad Sign for Publishers

The retailer has quietly cut its entire magazine spend for the first half of 2009, according to several publishers. "We were on a media plan for Macy's, and we got a call," said one publisher. "They scuttled the entire first half." That comes amid a marketing binge that includes Macy's 150th-birthday celebration, complete with fireworks and a gala last week, and a robust holiday marketing plan.

A Macy's spokeswoman declined to confirm the move. "Magazines have been and will remain a very important vehicle for Macy's advertising messages," the company said in a statement to Ad Age. "Given the competitive nature of the business, we do not disclose specifics of our media-buying strategies." Macy's media agency, Mediaedge:cia, declined to comment.

The development spells more bad news for publishers that had secured pieces of Macy's magazine budget, which topped $20 million in the first half of 2008 and $27 million in the first half of 2007, according to TNS Media Intelligence. But it's also a bad sign for each and every magazine, as it seems to show that a major marketer has calculated that magazines' contributions to its business are expendable in this environment -- at least until it sees how the holiday shopping season pans out.

Observers were wary of the reasoning.

Experiment?
"I don't know why they would do something like that," said one retail expert, calling print "very hard" to replace. "That's definitely a big change of strategic direction. Obviously everyone is exploring their strategy, their strategic direction."

"They may be testing," the expert added. "They may think they're going to go just to TV. We've heard retailers in the past say they're only going to do TV advertising and see what that does."

Mike Gatti, director, Retail Advertising and Marketing Association, declined to comment on Macy's specifically but said retailers across the board are likely to trim budgets in the first half. "Economically, everybody is saying it's going to pick up in the second half of the year. So you'll see a shift toward the second half of the year," he said. "It will get very competitive, and [retailers will] hope for pent-up demand."

Still, Mr. Gatti cautioned that pulling back too much in this environment would put retailers at a competitive disadvantage. "Now is not the time to disappear off of people's radars. Now is the time to at least try to stay partially there," he said. "I would not want to be completely absent in the first half of the year. There are brands out there, companies out there, that are in better financial situations, and they are making sure their brand is out there."

Indeed, department stores such as Macy's have been harder hit than discounters such as Wal-Mart and Target since the economy took a turn for the worse. In the first eight months of the year, Macy's reported a 3.2% decline in sales at stores open at least a year. The retailer has projected that same-store sales for the fall season could be down 3% to 6%.

In press materials for Macy's "Believe" holiday campaign, which breaks Nov. 9, TV, newspapers and digital advertising were highlighted. The retailer is executing a hefty newspaper buy, with full-page and disrupter ads planned for more than 300 newspapers. Martine Reardon, Macy's exec-VP marketing, said magazines will be a part of the retailer's holiday buy, although she declined to disclose which magazines are involved.